PURVANSEFebruary 10, 2023

Puravankara Limited

8,645words
113turns
14analyst exchanges
5executives
Management on call
Ashish Puravankara
MANAGING DIRECTOR
Neeraj Gautam
EXECUTIVE VICE PRESIDENT OF FINANCE – PURAVANKARA LIMITED
Vishnu Moorthi
PURAVANKARA LIMITED
Abhishek Kapoor
CHIEF EXECUTIVE OFFICER
Samar Sarda
AXIS CAPITAL
Key numbers — 40 extracted
rs,
look for our economy and growth. We see sustained strong demand, particularly for Grade A developers, that government's focus on infrastructure investment and housing for all, the budget is commendabl
66%
and housing for all, the budget is commendable.The steep hike in outlay for the PM Awas Yojana by 66% to INR 79,000 crores will give the much-needed fillip to the affordable housing sector, an estima
INR 79,000 crore
sing for all, the budget is commendable.The steep hike in outlay for the PM Awas Yojana by 66% to INR 79,000 crores will give the much-needed fillip to the affordable housing sector, an estimated growth rate of o
6%
ll give the much-needed fillip to the affordable housing sector, an estimated growth rate of over 6% for the Indian economy for next fiscal year is likely to support the current momentum of sales in
INR 742 crore
uarter FY 2023- during the third quarter of FY 2023, collections from operations were amounted to INR 742 crores, an increase of 87% compared to the same period in the previous fiscal year wh
87%
23, collections from operations were amounted to INR 742 crores, an increase of 87% compared to the same period in the previous fiscal year when collections were INR 397 crores. On
INR 397 crore
increase of 87% compared to the same period in the previous fiscal year when collections were INR 397 crores. On a 9-month basis, collections for FY 2023 reached to INR 1,959 crores, a 78% increase compare
INR 1,959 crore
year when collections were INR 397 crores. On a 9-month basis, collections for FY 2023 reached to INR 1,959 crores, a 78% increase compared to the same period in the previous fiscal year when collections were
78%
were INR 397 crores. On a 9-month basis, collections for FY 2023 reached to INR 1,959 crores, a 78% increase compared to the same period in the previous fiscal year when collections were INR 1,100
INR 1,100 crore
s, a 78% increase compared to the same period in the previous fiscal year when collections were INR 1,100 crores. Concurrently, operating outflows also increased by approximately 78%, reflecting increased spen
49%
er square feet, I would put an emphasis here, debt per square feet has decreased by approximately 49%, despite incurring additional debt of approximately INR 100 crores for land acquisition , our net
INR 100 crore
quare feet has decreased by approximately 49%, despite incurring additional debt of approximately INR 100 crores for land acquisition , our net debt has declined to INR 2,135 crores as on December 31, 2022.
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Guidance — 20 items
Neeraj Gautam
opening
“And my colleagues and I will be available to answer any questions you may have.”
Neeraj Gautam
opening
“We see sustained strong demand, particularly for Grade A developers, that government's focus on infrastructure investment and housing for all, the budget is commendable.The steep hike in outlay for the PM Awas Yojana by 66% to INR 79,000 crores will give the much-needed fillip to the affordable housing sector, an estimated growth rate of over 6% for the Indian economy for next fiscal year is likely to support the current momentum of sales in the real estate sector.”
Neeraj Gautam
opening
“Concurrently, operating outflows also increased by approximately 78%, reflecting increased spending on project development to ensure timely and efficient completion.”
Neeraj Gautam
opening
“On business development side, the company has successfully acquired approximately 100 acres of land in Chennai in the quarter for a planned plotted development project.”
Neeraj Gautam
opening
“The project is expected to be launched in the next 6 months, and there are several other opportunities being considered for acquisition in the South and West.”
Aryan Sharma
qa
“So my first question is what is the revenue guidance for next around 5 years down the line?”
Abhishek Kapoor
qa
“We don't give guidance typically as a process.”
Abhishek Kapoor
qa
“And in fact, if you look at our total revenue guidance in terms of the projects that have already been launched and will get launched.”
Abhishek Kapoor
qa
“Sorry, just the surplus itself, total top line will be about INR 4,500 crores other than what is already under construction and the revenues that have to be collected from the under construction projects.”
Abhishek Kapoor
qa
“So potentially, you can calculate what kind of numbers we will be achieving on an annualized basis.”
Risks & concerns — 2 flagged
Having said that, the impact of this increase, which is happening on the repo rate and the EMIs -- if you look at and you do the numbers, the math stacks up in a way where increments of salaries and income on an annualized basis versus increase in EMI easily gives enough headroom for customers to continue to buy.
— Abhishek Kapoor
So we don't see that as a challenge at all for a strong brand like ourselves.
— Abhishek Kapoor
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Q&A — 14 exchanges
Q
So my first question is what is the revenue guidance for next around 5 years down the line?
Abhishek Kapoor
We don't give guidance typically as a process. But as you are seeing the trend, typically, I mean, from last year to this year, if you look at our numbers, this year, we already had INR 2,100 crores of presales, right? Now these pre sales keep accumulating. And as delivery happens, they get converted into our revenue recognition and therefore, in terms of accounting, showing us revenue numbers. So as I said, currently, in this year itself, we have launched about 4 million square foot already. We are adding another 2 million square foot. The numbers that were shared by Neeraj a little while bac
Q
See, if you look at our current EBITDAis at 34% for the quarter.. And typically, in our Puravankara brand , we earn an EBITDA margin of 30% to 32%. In Provident projects, we earn an EBITDA margin of 22% to 25%. And a plotted project, we earn EBITDA margin of 35% to 40%. -- that's broadly EBITDA margin for our different products. As far as PAT is concerned, PAT is a function of multiple things. As you know, the real estate accounting revenue recognition and profit reporting is based on accounting standards 115. PAT will be the function of the kind of operating expenses we are incurring in a qua
Management
Q
If you look at our slides in our investor presentation, Slide number 14 and Slide 34 and 35 are ready to move in inventories very less, is 0.29 million square feet left and our inventory from ready and we have an inventory from ongoing projects as say on 31st December 2022 was 6.9 million square feet. Mihir Desai Okay. Okay. So sir, supply shouldn't be a constraint for us, right?
Neeraj Gautam
Of course, not. And what it meant is inventory left only 0.29 million square feet , over the last 2 and 2.5 years, we have completely sold our ready-to-move-in inventory. And right now, our launch inventory is already 6.9 million square feet, which is a decent inventory. Besides this, as Abhishek mentioned some time back, this financial year itself, we are adding another 2.5 million square feet by launching new projects in the Q4. Besides that, our launch pipeline is on Slide number 20, which gives information that 16 million square feet we are targeting to launch in the next 12-month period f
Q
So my first question was on this new business development. So can you elaborate what kind of developable area would be there for this Chennai project? And how much money has been spent on this project and how it was funded?
Abhishek Kapoor
So it is 100 acres. Total deployment in the project is about INR 200 crores. We are looking at generating a little over 3 million square foot of development area. And the total development potential will be about INR 750 crores. Great. And you also highlighted that it will be launched in the next 6 months. So has the management been looking for business development, which can be launched at a much faster pace, say, within 6 months? Or is this kind of a gap in timelines you have set for yourself that new business development should come to the launch pipeline within 6 months or, say, within 9 m
Q
Sure. Number want to understand how are the Mumbai project from the diversification perspective how are Mumbai projects performing? And what are the growth plans for Mumbai as a -- western as a micro market in terms of new launch plans?
Abhishek Kapoor
So we have launched 2 projects in Mumbai, 1 under the brand Puravankara in Chembur called Clermont and another one in Shilphata, Dombivali called Palm Vista. For our expansion plans, we are looking at multiple strategies. We are looking at outright as well as JDA structures and society redevelopment. So we have a robust pipeline of projects in all 3 areas and depending on the kind of margin and the kind of transactions because we are very much focused on ensuring that we have profitable business and keeping in mind our strengths. We are looking at all 3 categories of projects, which is JDA, ou
Q
Congratulations on a very good set of numbers. Sir, I had a couple of questions. So we are seeing interest rates rising, have you noticed a decrease in say traffic to the site, any particular trends that you've noticed? And say, if the rate was to rise further, at what point do you think it will start affecting our demand?
Abhishek Kapoor
So I think two things. If you look at our sales, over 80% of our sales are in the sub INR 2 crores bracket. And you can see that and refer to Slide number 14, and he'll give you a breakup of the geography and the average ticket value of our units. So in terms of increasing interest rates for now, to answer your question, we haven't seen any decrease in demand because of increasing interest rates. As you can see that in the numbers. Also, we believe that we are now in the tapering off cycle of the increasing interest rates. I mean the last increase is at 25 bps. We are hopeful and positive that
Q
I just had a couple of questions, very broad based. I just wanted to check with sir what are your thoughts on the current market, Mumbai market potential? And how do you see this growing further -- just your thoughts on this?
Abhishek Kapoor
So we believe that Mumbai market is poised for continuous growth. Multiple infrastructure initiatives are currently underway, which we believe will make a huge difference to the movement of people and therefore, economic activity in Mumbai whether it is the coastal road or whether it is the Nhava Sheva Shivadi link or the new airport or the metro stations or the new flyers connecting BKC. So there is tremendous infrastructure that is going on in Mumbai. And we believe that, that will make it the liveability and the quality of life will significantly improve for people in that market and it wil
Q
I wanted to understand both the EBITDA margin level, what kind of cost do we see going forward on a sustainable basis? And how much should the interest cost be normally?
Neeraj Gautam
As you know, the interest in the case of our case is a borrowing cost for inventory. So whatever interest we are incurring simply gets capitalized to the inventory. EBITDA margin, as I mentioned to the question of some other participants. AT Puravankara level, our EBITDA margin will be close to 30% to 34% for Provident Housing Limited, our EBITDA margin will be in the range of 22% to 25%. For Purva Land business, our EBITDA margin will be e in the range of 35% to 40%. That is EBITDA margin broadly for our r different product segments. If you look at our EBITDA margin over a period of time, a q
Q
Sorry, if this was asked earlier, I just wanted to know how many square feet do we plan to launch in the current calendar year 2023 that is…
Abhishek Kapoor
We are looking at 16 million square foot of total launch. And you can refer to the launch pipeline page number 20 from the... Investor presentation. Please refer to page number 20 for ICP that this detail of our launch plan for the next 12 months. And you can also refer our Slide number 19 for the projects which we have launched in the last 9 months and which we are launching in the next 2 months for this financial year. Got it. Got it. And so just one more question. How has the price rise been across the projects? And any specific locations where you are witnessing the price appreciation? So
Q
Yes. My first question is with respect to the land purchase INR 185 crores, I think it is. Can you just -- sorry, INR 138 crores of land payments, which have been made. What is the plan payment for -- and my second question is with respect to the mix of JV, JDA and own development in total sales, will there be any change in mix in YTD.
Abhishek Kapoor
So this investment, as I mentioned earlier on the call, is towards the plotted development, wherein total of about 100 acres has been acquired. And we have -- we are looking at a total potential of about 3 million square foot -- over 3 million square foot in this development. And this is a plotted development and we are looking at a revenue potential of over INR 750 crores as far as this is concerned. Now from the point of view of going forward, as I mentioned earlier, not every project can be acquired outright. We are well aware of that. So we look at selectively the best opportunities in ter
Q
Yes. I thought we'll probably close it with a couple of questions from my end. On this debt per square feet you've highlighted this time in your presentation. I'm assuming it is debt per square feet of area under development, which is 17 million square feet? Hello?
Management
Q
Yes.?
Abhishek Kapoor
Yes, Abhishek here. Sorry, we missed the last piece, the line dropped out. So before I check like this debt per square feet, you've highlighted this time around. I'm assuming the debt per square feet is the denominator is area under construction, which is 17 million square feet, right? Correct. Now it will also have a lot of plotted development, which will increase going ahead. My question really was, is it debt to cash flow or debt to collections a more better phenomenon because if I see like from a sales perspective, of course, the last 2 years have been good. But if there is a year of bad s
Q
Sir, one question, like what is the kind of square footage sales, which we are looking at over the next few years? So right now, I think we are at $1 million for this quarter, right?
Abhishek Kapoor
Yes. We are at $1 million for this quarter. So as I said, our typical run rate is dependent on new launches and on the sustenance business. Our increased effort towards adding new launches, which is to the tune of almost 16 million square foot in the coming year. And adding to that, what is going on in the sustenance business, which continues to churn the sales number for us. We'll obviously give you a direction in what we look at as a volume. We don't give guidance. We don't give forward-looking statements in that sense, but you can calculate from your own methodology on what the trend has be
Q
I would like to express my gratitude for your participation in this conference call. If you have any additional questions or would like to continue the discussion, please feel free to reach out to us in the coming weeks, wishing everyone a fantastic weekend, and a Happy Valentine's Day. Thank you very much.
Management
Speaking time
Abhishek Kapoor
34
Neeraj Gautam
22
Moderator
17
Vaibhav
14
Samar Sarda
7
Anushka Atri
4
Nikita Mehta
4
Aryan Sharma
3
Ronald Siyoni
3
Tanushri Mehta
2
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Opening remarks
Samar Sarda
Yes. Thanks.Nirav Good evening, everybody, and welcome again for the quarterly conference call of Puravankara Limited. From the senior management, we are led by Mr. Abhishek Kapoor, the CEO, Neeraj and Mr. Vishnu Moorthi. Gentlemen, congratulations on yet another good quarter on presales, and I hand it over to you for your initial comments.
Neeraj Gautam
Good evening, and welcome once again to Puravankara Limited earnings call for the third quarter. My name is Neeraj Gautam and I serve as an Executive Vice President of Finance at Puravankara Limited. I would like to thank you for joining us today. As a leading real estate company, we are proud to report our financial results for the last quarter and 9-month period, and we look forward to sharing our outlook and key initiatives with you, the result of quarter ending December 31, 2022, along with a comprehensive presentation have already been uploaded to the stock exchanges for your review. During this call, I will provide a summary of the key highlights of the quarter and 9-month's period. And my colleagues and I will be available to answer any questions you may have. Additionally, we welcome any feedback or suggestion you may have. We are glad to report that company has made a strong start to the current fiscal year, and we are maintaining this momentum throughout this quarter. We are
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